House Rules

Factors Influencing Control in International Management

The effectiveness of the external activity control system is influenced by a number of factors, such as: a variety of environments; size of international activity; lack of adequate data; management concept; Communication systems, geographical distance.

A variety of environments, legal structures, political systems, currency value, social characteristics, and cultural factors complicate the task of developing and managing a management program. Due to such a variety of environmental conditions, each unit seeks to develop plans that reflect the local situation for each major product and market. The department considers it necessary to act independently in developing plans and priorities to meet local needs, although these units, from the point of view of the global strategy, are closely interconnected, since all activities must be combined to achieve the common goal of the company. Thus, there are constant conflicts between the needs, local specific situations and the general goals of the company. A variety of these issues is also reflected in the management system.
The size of international activity. As the share of sales abroad increases, management becomes more active in deciding on international markets. In addition, as the activities of external subsidiaries increase, the frequency of decisions made by the head office decreases, and the frequency of decisions divided by the head office increases.
Lack of adequate data. Inaccuracy and lack of available data on economic conditions, the market and consumers strongly influence control. If the management plan and goals in a particular country are based on inadequate data, this will adversely affect the ability to control and change management activities. In addition, political and economic instability makes it difficult to develop forecasts on which the management plan is based. Consequently, the control process should be flexible enough to compensate for the inaccuracy and instability of the data on which the plans are based.
Leadership concept. The management concept for the centralization / decentralization report influences the development of a control system. A strong centralized management system will require an effective communications system so that headquarters can receive information in a timely and safe manner in order to make appropriate decisions and then quickly send them to local management for immediate implementation.
 A decentralized management system may not require such a communication system, but it will require the establishment of a well-documented set of goals for each unit. These goals will help to make local decisions and monitor the implementation of these decisions to achieve the goals of the company.

Communication systems. An effective system will facilitate the control of activities. Physical communication processes, such as telephone, mail, telex, fax, and personal visits, are highly dependent on both distance and location. The more developed the communication system in the country, the easier communication will be and, therefore, the control process.
Geographical distance. The management system is also influenced by the geographical distance that separates the headquarters from the work units. The larger it is, the longer the costs and the likelihood of errors occur. Geographic distance also affects the speed at which changes are made and problems that may arise are identified.